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What to Look for in a Tax Advisor

Does the thought of tax season make you break out in hives? Fear no more! Our easy, step-by-step guide will help you prepare your taxes without even breaking a sweat!

Most people dread this time of year because of all the filing and paperwork involved with taxes. Thankfully, it doesn’t have to be that way! Preparing your taxes can actually be a simple, no-stress process if you do a little work on the front end. All it takes is some organization and time.

Step 1: Gather Your Tax Documents

In order to do your taxes, you need to collect all of your tax documents. Think of it as a scavenger hunt, if that makes it a little more fun! What forms will you need? Here are a few to keep in mind:

  • W-2s

  • 1099s

  • Mortgage interest statements

  • Investment income statements

And if this is your first season filing taxes as a married couple, congrats! There are several tax tips newlyweds should know. But getting hitched isn’t the only major life change that might require some additional paperwork. To keep your tax prep running smoothly, here are a few more documents you may need to add to your list:

  • Form 8822 (if you moved)

  • SS-5 (if you changed your name)

  • W-4 (to adjust tax withholdings based on your new household income)

Income and investment interest forms should be mailed to you by Jan. 31, so keep an eye out for those documents. If you haven’t received your tax statements by the first or second week of February, call the necessary people to be sure you receive your paperwork in plenty of time to get your taxes done.

Get your taxes done right by the best in the business!

Afraid of forgetting a document you’ll need around Tax Day? To help you get all your ducks in a row, download our free tax preparation checklist.

Step 2: Choose Between the Standard Deduction or Itemizing

When you file your taxes, you have two choices: Take the standard deduction or itemize your deductions. This is a pretty big deal, because tax deductions lower your taxable income—and the lower your taxable income is, the smaller your tax bill will be!

So, how do you decide which option to take? Well, the standard deduction for the 2020 tax year for single filers is $12,400 and $28,400 for married folks filing jointly.1 If you can write more than those amounts off your taxes for the year, you’re better off itemizing. If not, save yourself the hassle of digging through filing cabinets for old receipts and just take the standard deduction.

If you do plan on itemizing deductions, you’ll need proof to back up your claims. So, don’t forget any receipts for deductions and tax credits like:

  • Childcare

  • Education costs

  • Charitable giving

  • Medical expenses

When in doubt, it never hurts to reach out to a tax pro and get their advice on how to do your taxes this year.

Step 3: Pick a Filing Status

Your filing status helps you figure out what you’ll need to do to file, what your standard deduction is, your eligibility for certain credits, and how much you’ll owe in taxes.

There are times when picking your filing status is pretty straightforward—like if you’re single—and other times when you might qualify for more than one filing status and it’s not so clear.

How do you figure out which filing status to pick? There are five different statuses to choose from:

  • Single. If you’re not married, divorced or legally separated, or widowed before the tax year, you’ll file as a single taxpayer. Simple enough, right?
  • Married Filing Jointly. You’re married and both of you agree to file a joint return. In most cases, married couples usually save more by filing jointly.
  • Married Filing Separately. If you’re married and for some reason don’t agree to file jointly—maybe you want to be responsible for your taxes only or filing separately results in a lower tax bill—you can use this filing status.
  • Head of Household. This one’s a little tricky. To qualify you must have paid for more than half of the household expenses for the year, be unmarried, and must have a “qualifying child or dependent.” So, if you’re a single parent or taking care of an ailing family member, you might qualify to file as head of household.
  • Qualifying widow(er). If your spouse dies and you don’t remarry in the same tax year, you can file jointly with your deceased spouse. For the two years following the year of death, you can use the qualifying widow(er) filing status if you choose to.2

In most cases, folks will either file as single taxpayers or married filing jointly. But there are some rare instances where you might consider filing separately or another filing status if it applies—so always do the math.

Step 4: File Your Taxes

Once you have all your documents organized, you’re ready to file your taxes!

According to the IRS, most Americans in 2020 chose to hire a professional (53%) to help them file their tax returns electronically. The rest decided to file on their own using tax software or going old school and filing by paper and mailing it in.3

But which filing option should you choose? Let’s take a closer look at online versus tax pro filing options to help you determine which is best for you.

Online software can be straightforward if your situation is pretty simple and you’re planning to take the standard deduction. However, if your tax return is more complicated—like if you own a business or know you need to itemize your deductions—it’s worth it to hire a tax professional.

If you’re still not sure which option is best for your situation, take our simple quiz!

The tax deadline is normally April 15, but that isn’t set in stone. Take 2020 for example: Due to the coronavirus outbreak, the tax deadline was extended to July 15 for 2019 taxes. Keep in mind that was a very unusual tax season, so don’t take April 15 off your calendar.

Now, you don’t want to wait until the last minute to file your tax return. Trying to schedule a meeting with your tax pro a week before Tax Day is like trying to find tickets for the Super Bowl night of—good luck trying to do eitherAnd besides, there are plenty of reasons to file your taxes early, like less stress and protection from tax fraud.

Step 5: Get Organized for Next Year

If you end up with a big tax refund or a large tax bill, you probably want to go ahead and adjust your withholdings so that you’re not taking too much or too little out of your paycheck for taxes. 

And one more thing: Once your taxes are signed, sealed and delivered to the IRS, you might be tempted to celebrate by starting a bonfire and burning all those receipts and tax forms in a blaze of glory . . . don’t do that.

Instead, promptly file any tax documents and important receipts when you receive them so you don’t have to search the house for them next spring. Buy a few manila folders, an accordion file or a filing system that will hold your tax documents and save them for at least three years. You might need them if the IRS comes knocking.

How to Get Your Taxes Done Right This Year

See? That wasn’t so bad, was it? If you just take a little time and energy to implement these five steps throughout tax season, you’ll be set. Plus, you’ll eliminate the stress and worry if you’re organized on the front end.

Now, for actually getting those pesky taxes done: If your taxes are super simple, try an easy-to-use tax software like Ramsey SmartTax. With Ramsey SmartTax, you’ll always know up front how much you owe when you file your taxes. No hidden fees, no advertisements, no games. That’s how it should be!

But what if you have a more complicated tax situation or had a wild year in 2020? In that case, work with a tax pro to streamline the process and avoid filing mistakes. And if you’re looking for a trustworthy tax expert in your area, talk to one of our tax Endorsed Local Providers (ELPs). These tax pros take the time to explain your taxes and make sure you get every deduction you’re eligible to receive. Don’t wait until the tax crunch.

Find a tax pro today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

Tax Pro or File Your Own?

Take the Quiz

Tax Pro or File Your Own?

Use this free quiz to help you decide which tax filing method is right for you.
Take the Quiz

Tax Pro or File Your Own?

Use this free quiz to help you decide which tax filing method is right for you.
Take the Quiz